Lord of the Rings Amazon exit fallout: Auckland Film Studios rebuild going ahead

The Hobbit: An Unexpected Journey trailer. Video / Warner Bros. Pictures

A $35 million rebuild of one of the country's biggest film studios will go ahead despite the glamour Lord of the Rings TV series moving production away from New Zealand.

Auckland Mayor Phil Goff on August 3 touted Auckland Film Studios' taxpayer funded expansion a "momentous milestone" for the local industry.

It would bring in tens of millions of investment dollars and up to 300 production-related jobs to West Auckland, he said.

But just 10 days later, Amazon Studios threw the project into doubt by abruptly moving its $1 billion-plus LOTR show to the UK after just one season of filming.

That led to an immediate review of the Auckland Council-owned studio's $35m rebuild - made up of $30m in Government funding and $5m from council.

Council's economic development arm Auckland Unlimited - which is managing the project - said Amazon's exit made it prudent to review whether there was still a need to expand.

"But after pausing to review the plan, it is very clear the reasons for developing new stages in Auckland stack up as strongly as ever," Auckland Unlimited chief executive Nick Hill said.

"Auckland has long experienced a shortage of quality studio space and we have a key role in ensuring our region's billion-dollar screen sector has the level of studio space it needs to keep growing, create skilled jobs and support businesses."

Despite the expansion project going ahead, Amazon's sudden New Zealand exit highlighted the risk-reward balance that came with taxpayer backing of the film industry.

Marketing wizards had hoped a new Lord of the Rings TV series would whip up fresh tourism and film industry dollars. Photo / Supplied

Sir Peter Jackson's original LOTR movies, filmed at more than 150 locations around the country, helped boost New Zealand's global profile in a way marketing wizards could only have dreamed of.

New Zealand experienced a 40 per cent increase in tourists - from 1.7 to 2.4m annual visitors - between 2000 and 2006 during the films' reign at the box office.

It also helped grow the local film industry.

Many hoped Amazon's follow-up TV series could also boost tourism. The project already brought about $650m into the local economy and employed nearly 2000 New Zealanders in just one season of production, the NZ Film Commission said.

But major film and TV productions can shift their bases quickly and are often courted by governments around the world offering tax breaks and other sweeteners.

Minister of Tourism Stuart Nash said the Government only discovered on August 12 - a day before the public - Amazon was pulling the plug on LOTR production in Auckland.

"The international film sector is incredibly competitive and highly mobile. We have no regrets about giving this production our best shot with Government support," Nash earlier said.

"However, we are disappointed for the local screen industry. Work will continue across Government on ways to keep supporting the sector."

Auckland Unlimited's Hill said there was a risk backing the film industry.

"We only take a certain kind of risk, which is around the studio infrastructure," he said.

Auckland Film Studios in West Auckland is set for a major upgrade that Auckland Council hopes will attract more big budget productions. Photo / Supplied

The council would be keen to get out of the film studio business if a private sector player was willing to take over, he said.

"But the reason we do it is because the multiplier effects of having that industry are significant for the regional economy and all sorts of other businesses and that whole ecosystem."

AFS is a focal point for the West Auckland screen heartland where many of the region's 4000 screen industry workers and 1800 supply companies are based.

The $35m "transformation" project will allow construction of two 2000sq m sound stages and development of further workshops and offices.

Auckland Unlimited's review found the long-term business case stacked up as the growth in streaming services and even online gaming led to more demand for studios, Hill said.

"We have assured ourselves the screen industry globally is extremely strong, it continues to grow, there is a shortage of studio space internationally and a lot of demand," he said.

Despite Amazon shifting the LOTR TV series to the UK, it would continue post-production work in New Zealand until June next year.

It was also still the licenced tenant at AFS for "a while yet", Hill said.

The ongoing tenancy gave Auckland Unlimited and others involved in attracting new productions some time to line up new shows before Amazon's tenancy ended, he said.

AFS has been the filming location for several international productions including Xena: Warrior Princess, Whale Rider, Power Rangers, Crouching Tiger, Hidden Dragon: Sword of Destiny and The Chronicles of Narnia.

Goff earlier said the funding boost for the studio is " hugely transformative for the region's screen industry".

"A much larger AFS facility will mean Auckland has another truly world-class option to host large-scale productions on a single studio site, or be able to host multiple small or mid-size projects at the same time."